The recent update from the National Pension Commission (PenCom) highlights the positive trajectory in the regulated pension industry. According to the latest monthly data, the industry’s asset under management (AUM) experienced a robust growth of 20% y/y to NGN17.4trn as at end-Sep 23. This represents a notable increase of NGN2.9trn in absolute value terms. On a m/m basis, the industry’s total assets was modest at 0.3% m/m, compared with the nearly +1% m/m growth it recorded the previous month.Thank you for reading this post, don't forget to subscribe!
The marked y/y growth was primarily driven by a 23% y/y increase in the value of FGN bonds to NGN10.9trn, accounting for 63% of the total AUM.
Unlike other markets such as Kenya and South Africa, where the asset allocation is more diverse, Nigerian PFAs allocate most of their assets to FGN bonds due to strict statutory requirements and limited market depth of other asset classes.
PFAs’ asset allocation to corporate debt has been gradually increasing. It was up 25% y/y, or NGN369bn to almost NGN1.9trn.
The industry’s asset allocation to domestic equities is up 58% y/y to NGN1.4trn, thanks to the solid positive performance of the equity market this year, which has resulted in the Nigerian Stock Exchange All-Share-Index (NGX ASI) delivering a year-to-date return of a 38.8%
In contrast, asset allocation to money market funds fell by -22% y/y, or NGN470bn, to about NGN16trn.
Regarding the growth of the individual funds, the RSA Fund I grew the fastest with a y/y growth of 102% y/y growth to NGN133bn.
However, the RSA Fund II delivered the most significant absolute performance of NGN1.2trn to take the Fund’s total AUM to NGN7.5trn.
Based on a total RSA of slightly over 10 million account holders, the total pension AUM translates to roughly NGN1.7m per account holder.